Last year Hanrick Curran alerted Horizon readers to the fact that pre-paying their private health insurance would save them tax.
In this instalment, we invite you to take a holiday by paying your tax.
Did you know about the 'Government EasyPay Service' which allows most Australian Taxation Office (ATO) (and other Government) bills to be paid by credit card?
While the EasyPay service charges a minimal credit card fee (passing on bank costs), this fee may be tax deductible in some instances.
If you pay your tax with a credit card that is linked to a frequent flyer points scheme, you could soon be flying away on a well deserved holiday – courtesy of the ATO.
While the idea of paying business expenses by credit card to accumulate 'points' is not new, the ability to pay your tax liabilities by credit card is a fairly recent phenomenon. Please review the ATO website on details of how to pay your tax bill by credit card: www.ato.gov.au.
The ATO has released a tax ruling and a practice statement which advise that in most cases, deriving points by paying business expenses should not result in income tax or fringe benefits tax (FBT). In certain limited circumstances tax or FBT may be payable if there is a deliberate scheme or arrangement to try to create a benefit for an employee. However, the ATO have advised they would generally not look at arrangements unless the scheme is so contrived as to there being no commercial reason for it, or is in substitution of income, or generates more than 250,000 of points.
As always, we recommend you seek professional advice pertaining to your situation.
This article was published in the Autumn 2013 Horizon. For a pdf version of the newsletter please click here.